This office lease clause should be used in a base year lease. This form states that when the building is not at least 95% occupied during all or a portion of any lease year the landlord shall make an appropriate adjustment in accordance with industry standards of the building operating costs. This amount shall be deemed to be the amount of building operating costs for the year.
The Vermont Gross Up Clause is a crucial aspect to be incorporated in a Base Year Lease agreement. It serves to ensure fairness and accuracy in calculating the tenant's share of operating expenses, particularly in situations involving increases in property taxes, insurance costs, or other common area expenses. Two common types of Vermont Gross Up Clauses that are recommended for inclusion in a Base Year Lease are: 1. Proportional Gross Up Clause: This type of clause allows the tenant's share of expenses to be adjusted proportionally based on changes in the total rentable square footage (RSF) of the property. In this scenario, if the RSF of the property increases or decreases during the lease term, the tenant's share of expenses will be adjusted accordingly to maintain fairness. This Gross Up Clause ensures that any changes in the building's size are taken into account, avoiding potential discrepancies in expense calculations. 2. Expense Cap Gross Up Clause: This type of clause sets a predetermined maximum threshold on the annual increase in expenses that the tenant is responsible for. If the expenses exceed the defined cap, the tenant shall not be obligated to assume the excess amount. As a result, the landlord becomes responsible for absorbing any additional costs beyond the cap. This Gross Up Clause offers the tenant a level of protection against unexpected spikes in expenses, ensuring a more predictable financial commitment. The implementation of a Vermont Gross Up Clause in a Base Year Lease benefits both the tenant and the landlord. It establishes transparency, prevents unfair expense allocations, and provides clarity on how changes in operating expenses will be managed throughout the lease term. It is crucial for both parties to thoroughly understand and negotiate the specific language of the Gross Up Clause to meet their individual needs and protect their respective interests.
